President Reagan vowed yesterday to "marshal every resource of our administration" to recast the congressional budget resolution on the Senate floor in an effort to preserve the threatened third year of his tax cut, boost defense outlays and hold down domestic spending.
One day after the Republican-controlled Senate Budget Committee, with help from Democrats, defied him on all three goals, Reagan opened a 14-minute news conference by promising to fight what he branded a "quick political fix" that could "sabotage the recovery we've worked so hard for . . . ."
He was referring to the Budget Committee's approval of a fiscal 1984 Democratic plan to increase taxes by $30 billion, and the panel's decision to give him half of the 10 percent after-inflation increase in defense he requested and higher levels of domestic spending than he wants.
Linking the outcome of the budget battle to economic recovery, Reagan also used his opening remarks to welcome yesterday's report that inflation moderated to 0.1 percent in March and 3.6 percent over the last year.
"We've had virtually no inflation in America for the last six months," he said.
The president dodged when asked whether he would veto legislation to postpone withholding of taxes on interest and dividend income, which the Senate, in a rebuff to him, passed 91 to 5 on Thursday.
"I will make up my mind on that when I see what happens in the House," he said. "It might not get through the House."
On the budget and withholding issues, Reagan was questioned by reporters about the evident restlessness in Republican ranks on Capitol Hill and the willingness of GOP senators to break from administration positions. But in both cases, Reagan treated the votes as isolated incidents.
"In this particular instance, they went their own way," he said of the defections among Republicans on the withholding vote. "We will see what happens on some other episodes."
Likewise, he said the Budget Committee vote came about because "the only way we could have been victorious in that committee was to get every one of the 12 Republican votes, even one defector and we couldn't have gone out, so it was simply decided to put it out on the floor and take the matter to the floor."
It was because of such a deadlock on taxes among Budget Committee Republicans that Chairman Pete V. Domenici (R-N.M.) and three other GOP senators joined Democrats to send the resolution to the floor. Domenici said he would try to moderate the $30 billion tax increase and give Reagan more defense spending when the Senate takes up the budget, possibly late next week.
Also yesterday, Senate Finance Committee Chairman Robert J. Dole (R-Kan.) reiterated his opposition to the proposed tax increase, saying it would "almost certainly" jeopardize the scheduled 10 percent, July 1, third and final installment of Reagan's tax cut and "would be precisely the wrong move at the wrong time . . . ."
On defense spending, Reagan refused yesterday to second-guess his administration's strategy and tactics in dealing with the Budget Committee.
Domenici and others have blamed the president's intransigence and that of Defense Secretary Caspar W. Weinberger for the resulting vote to slash Reagan's requested 10 percent defense spending increase to 5 percent.
Questioned yesterday whether he would have won more if he had agreed to compromise earlier, Reagan said, "It just wasn't that easy." Rather, he faulted the senators for making cuts on a dollar basis when he said the administration has to "look at things--what do we feel we need to meet our defense strategy worldwide."
Reagan answered with a confident "yes" when asked whether he thought he could restore some of the defense funds on the Senate floor.
This week, Reagan aides offered a compromise on defense spending of 7.5 percent after inflation for the 1984 fiscal year, with declining increases for the four years after that.
The president is expected to seek a similar rate of increase in the full Senate, but he did not deal in numbers yesterday.
When asked about compromise on defense, Reagan said he could "go somewhat below" the original 10 percent request.
But he then referred only to relatively minor savings the administration is willing to make as a result of a less-costly MX intercontinental ballistics missile basing system, lower inflation and reduced fuel costs.
Reagan said, however, he is "obviously" going to seek an increase in military spending over what the Senate panel voted.
"We have proposed a compromise, but certainly not to the extent that the committee turned out, because that would be very irresponsible and it would be irresponsible on my part not to call it irresponsible," Reagan said.
As he has before, Reagan ruled out any compromise on the third installment of his tax cut.
On the withholding question, Reagan had threatened just a week ago to veto any repeal of the law. Yesterday he did not repeat that threat.
"As I have said many times before in this case--I have said an apple can be an orange, in this case a bad apple might turn out, yet, to be an orange," he said. "We will just wait and see."
Pressed as to whether he would veto the bill, Reagan said, "I feel strongly about it. That is all I will say in advance."
Reagan said the withholding vote in the Senate "was quite a triumph for the people who are not paying the taxes they fairly owe."
Noting that the withholding provision had been passed by both houses of Congress last summer "without any problem or any protest," the president said, "It is not a new tax. It went through the '82 election. And it was not even mentioned or was an issue or not. And then suddenly, a very successful lobbying effort went forward. And the simple fact is that what was voted in the Senate was to allow people to go on cheating on their income tax rather than making them pay their fair share."